Commodity, materials and financial stocks led the Canadian index lower. Coal companies were among the worst performers after coal for delivery in Amsterdam, Rotterdam or Antwerp fell 13% to $190 per metric tonne.

Some market watchers pointed to a superior court ruling in Georgia that halted the construction of a coal-fired electricity generation plant on environmental grounds.

Shares of oil companies were also down despite a rise in crude prices to a new record high of $144.32. Oilsands producer Suncor fell 5.1% while Canadian Oil Sands Trust was down 3.1%.

Toronto's S&P/TSX composite index closed down 433 points, or 2.99%, to 14,034 -- the largest one-day percentage loss since March 19 of this year.

Crude prices rallied after the U.S. Energy Information Administration said U.S. stockpiles decreased by 1982k barrels in the week ending June 27. The drawdown was larger than the 700k decrease expected. Late in the afternoon, WTI crude oil was up $2.60 to $143.57.

Mathieu Tessier, commodities futures specialist at ScotiaMcLeod, said the breakout in crude prices is a bullish technical signal that opens the way for $150.

The rise in crude prices and a troubling jobs report hurt U.S. stocks and helped treasuries rally. Payrolls company ADP said U.S. private employment declined by 79,000 jobs in June against the 20,000 decline expected.

The Dow Jones industrial average closed down 167 points to 11,216, the S&P 500 down 23 points to 1,262 and the Nasdaq down 54 points to 2,251. The Dow's close puts it into traditional bear market territory as it has fallen more than 20% from the highs of October.

U.S. two-year yields were down 7.3 bps to 2.58%, with five-year yields down 5.8 bps to 3.30%, 10-year yields down 4.5 bps to 3.96% and 30-year yields down 4.7 bps to 4.50%. The Eurodollar September 08 contract was up 1.0 tick to 97.07. The yield curve was steeper, with the 10/2-year spread up 2.9 bps to 138.21 bps.

Yields on two-year Canadian government bonds were down 1.5 bps to 3.23%, with five-year yields flat at 3.46%, 10-year yields up 1.4 bps to 3.75% and 30-year yields down 0.6 bps to 4.07%. The Canadian 10-year note is yielding 20.75 bps less than the U.S. 10-year note.

In Germany, returns on two-year German bonds were up 5.9 bps to 4.63%, with five-year yields up 5.8 bps to 4.68%, 10-year yields up 4.6 bps to 4.65% and 30-year yields up 2.5 bps to 4.85%.

Yields on UK two-year bonds were down 4.2 bps to 5.16%, with five-year yields down 3.3 bps to 5.13%, 10-year yields down 2.3 bps to 5.13% and 30-year yields down 3.6 bps to 4.69%.

The U.S. dollar came under pressure after the payrolls report but market watchers also point to Thursday's rate decision from the European Central Bank and a U.S. government report on non-farm employment as risks to the greenback.

The Canadian dollar is up 0.0098 to 0.9878 against the U.S. dollar (1.0124 USD/CAD) and up 0.7770 to 104.6100 against the yen.

The U.S. dollar is down 0.2250 to 105.9050 against the yen and the Dollar Index is down 0.322 to 72.047.

The euro is up 0.0091 to 1.5883 against the U.S. dollar, down 0.0064 to 1.6079 against the Canadian dollar, up 0.0054 to 0.7970 against the pound sterling and is higher by 0.62 to 168.21 against the yen.

The pound sterling is down 0.0018 to 1.9931 against the U.S. dollar and down 0.0216 to 2.0176 against the Canadian dollar.

All data taken at 4:58 p.m. EDT.

By Adam Button, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Cristina Markham, This email address is being protected from spam bots, you need Javascript enabled to view it

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